JC Flowers to invest in UK’s Kent Reliance-sources

LONDON, July 11 (BestGrowthStock) – Kent Reliance Building Society
is set to receive 50 million pounds ($75.8 million) from Flowers
and Co to bolster its balance sheet and create a springboard for
the U.S. private equity firm to consolidate part of the sector.

Flowers will combine its investment with the assets of the
150-year-old British building society in a new vehicle, with the
mutual retaining control with a 51 percent stake, sources
familiar with the matter said on Sunday.

Building societies have been struggling to meet the
regulator’s standards for core Tier One capital — a measure of
financial robustness — as profits have been squeezed in the
housing downturn.

Unlike banks, mutuals are unable to raise capital through
equity, and several have been forced to merge with larger
rivals.

Kent Reliance has involved the Financial Services Authority
in the talks with Flowers — which started last year — and
sources said the building society was confident the innovative
joint venture structure would get the go-ahead.

JC Flowers, founded by former Goldman Sachs partner J.
Christopher Flowers, hit the headlines when it a bid for
stricken Northern Rock in 2007, and it made an informal approach
to Friends Provident the following year.

Providing a deal was approved by Kent Reliance’s 180,000
members, Flowers would use the vehicle to create a
“super-mutual” of regional building societies, one of the
sources said.

Kent Reliance, which is the only building society based in
the south-east England county of the same name, made a pretax
profit of 2.26 million pounds in 2009 and had assets of 2.26
billion pounds at year-end.

Both Kent Reliance and JC Flowers declined to comment.
($1=.6593 Pound)
(Reporting by Paul Sandle; Editing by Hans Peters)

JC Flowers to invest in UK’s Kent Reliance-sources